A recent McKinsey study highlights the progress of U.S. Latino small business owners in accessing credit, suggesting a stronger financial foundation for their businesses. The share of Latino-owned businesses applying for credit rose to 15% in 2023, up from 12% the previous year.
Moreover, the average credit score for Latino business owners improved from 632 in 2022 to 647, reflecting a broader stabilization and enhancement of their financial profiles. Latino-owned businesses are already driving economic growth, accounting for 36% of new businesses in 2023, despite representing just 19% of the U.S. population.
"When you have more of these Latino businesses in different sectors, it creates a positive feedback loop and growth opportunities," said Alberto Chaia, a senior partner at McKinsey in Miami and co-author of the report. Chaia pointed to cities like Miami and Austin, where strong networks, educational attainment, and access to funding have fostered Latino entrepreneurial success
However, challenges remain. While 15% of all credit applications in the U.S. come from Latino-owned companies, up from 12% in 2022, about 50% of these businesses did not receive the full amount of credit requested. In comparison, about 34% of non-Latino, White-owned businesses received partial funding. This funding gap points to systemic disparities in financial support that could be bridged to unlock greater economic potential.
Experts suggest that targeted solutions, such as mentorship, educational resources, and tailored financial products, could help Latino entrepreneurs overcome these obstacles. "Educational advancement and ecosystem support can elevate these businesses, driving more inclusive economic growth," the report says.
Looking ahead, McKinsey estimates that addressing funding and resource gaps for Latino-owned businesses could generate an additional $1.4 trillion in revenue and create up to six million new jobs in the coming decades.
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